Marconi's Murky Reporting
May Mask Significant Trouble

Investors weren't thrilled with the results that Marconi PLC released last week -- and they shouldn't have been.

The major issue was cash flow. The British maker of telecom equipment had an operating-cash outflow of 106 million pounds ($153.0 million or 173.7 million euros) in the year ended March 31, compared with an inflow of 610 million pounds a year earlier. Marconi has a massive buildup in inventory to thank for that. Working...